As of January 1, 2015, the Work-related Expenses Scheme must be applied by every company. Note: in many cases, the Work-related Expenses Scheme results in a tax increase.
Under the work-related costs scheme, an amount equal to 1.5% of the total wage sum may be “designated” as tax-free reimbursements. The employer is free to determine which reimbursements are designated as tax-free reimbursements. However, this flat rate is much more limited for many employers than what they are currently used to reimbursing tax-free.
To comply with the new tax legislation, certain employment conditions will no longer be enforceable. The alternative is a final levy of 80%. This may mean that reimbursements need to be terminated or capped, which will involve a unilateral change of employment conditions.
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